Is a Property Partnership future proofing my business?

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My partner and I have a portfolio of 10 properties in joint names which we fully self-manage including lettings and repairs. They are singe let houses, not HMO’s. We treat this as a business as it is our main source of income. I’ve read quite a lot about the potential advantages of being a property partnership, particularly for future incorporation (SDLT relief).

We acquired our jointly owned properties as tenants in common with prescribed shares and our overall tax position regarding S24 is pretty good. We won’t get hit until year 4 and although annoyingly unfair it’s not likely to be a major problem. Our current strategy is that any future acquisitions will be through a limited company which we have up and running otherwise we would be hit further by S24 tax.

We have in effect been operating as a partnership with our 10 properties and certainly hit the 20hr time committed to the business threshold (Ramsay case). We also created a formal partnership agreement last year. I intend to submit a partnership return alongside our individual tax returns to register us as a partnership with HMRC. The aim being to potentially incorporate in the future. I don’t really need to incorporate now and we take income from profits but may want to in a few years time. The full implications of S24 will be in place and having all our properties within a company structure may well be preferable.

To register as a partnership with HMRC my understanding is that we will have to obtain a partnership UTR and submit

– Partnership Tax Return form SA800
– Partnership Trading and Professional Income form SA800TP
– Partnership UK Property form SA810

Is anyone else taking this approach and have any useful insights and advice.

Any advice on a couple of things I am also uncertain of are welcome.

1. Whether we are considered a Trade/Profession Partnership or Investment Partnership. I am assuming that as a Partnership we are running a business or profession in letting and managing rental property as opposed to an Investment partnership which sounds a lot more of a passive activity.
2. Does registering as a partnership have any impact on our individual tax status, for example, I have carried forward losses to offset against rental income (net profit) which I would of course like to continue to use.

Thanks

Adrian

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